IMF: Bitcoin’s growth will impact financial system
The world’s major financial institutions have so far described Bitcoin and other digital currencies as posing no risk to the financial system. The International Monetary Fund (IMF) states in a new report that rapid growth can certainly influence the international financial system.
The influence of Bitcoin was often discussed in public and concluded with a clear result. Bitcoin and crypto currencies pose no threat to the current global economy.
The summary of the report “World Economic Outlook: Challenges to steady Growth” published by the IMF, however, comes to a significantly different conclusion. This describes that crypto currencies could represent an additional source of risk for the established financial system (freely translated):
Cyber security breaches and cyber attacks on critical financial infrastructure represent an additional source of risk as they could undermine cross-border payment systems and disrupt trade in goods and services. Sustained rapid growth of crypto assets could create new weaknesses in the international financial system.
Although the crypto market has decreased by more than 80% on average since the high in December last year, great progress has been made in terms of adaptation and regulation.
Great heavyweights in the financial sector such as the New York Stock Exchange, which is planning its own stock exchange for crypto currencies with Bakkt, or Goldman Sachs, many companies have created the infrastructure to enable and facilitate institutional investors’ entry into the market.
A large number of companies and individuals see digital currencies as a possible alternative to traditional fiat money, so hackers have also begun to use the weak points on stock exchanges or wallets to steal billions. This is one of the problems that still need to be solved with the growth of Bitcoin and Co. (translated freely):
Stealing crypto currencies is similar to stealing cash, and in the long run the exchange will continue to be targeted by hacker attacks. It is just as important to establish systems that track hacking attacks by integrating different methods to prevent hacker attacks.
In South Korea many stock exchanges have already started some time ago to have large insurance providers secure their customers’ credit balances so that in an emergency it can be ensured that users’ crypto stocks are secure.
The American cryptoexchange Gemini has taken a similar path. Yusuf, Hussein, head of the risk department at Gemini, describes (freely translated):
Consumers are looking for the same insured protection they are used to from traditional financial institutions. By training our insurers, we can not only offer protection to our customers, but they can also expect consumer protection in the crypto industry.
The IMF report describes existing problems that need to be solved in order to secure and establish the adaptation of crypto currencies as an alternative asset class in the long term. We are looking forward to further developments in this area.
